Business

Cielo predicts Brazilian Central Bank to authorize the use of WhatsApp in payments in November

Facebook's messaging arm announced in June a partnership with Banco do Brasil, Cielo, Visa and Mastercard, but the Central Bank suspended this operation, authorizing it since the end of July only for tests

REUTERS/Aly Song
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  • Cielo announced that its third-quarter profit fell 71.5% compared to the same stage of 2019;
  • PIX should expand banking services in Brazil, creating greater opportunities for the financial sector, including Cielo itself.

The payment processor firm Cielo predicts that Brazilian Central Bank will authorize the use of WhatsApp in payments in November, said on Wednesday Cielo’s chief executive, Paulo Caffarelli.

“The expectation that we have heard from parties involved in the matter is that the regulator’s authorization will come out in November,” Caffarelli said in a conference call with journalists about Cielo’s third-quarter results, without mentioning names.

WhatsApp, Facebook‘s messaging arm, announced in June a partnership with Banco do Brasil, Cielo, and Visa and Mastercard payment card brands, but the Central Bank suspended this operation, authorizing it since the end of July only for tests.

READ ALSO: Visa aims at PIX to expand business beyond cards in Brazil

During this period, the expectation surrounding the commercial start of this business has increased the volatility of Cielo’s shares, with analysts evaluating that the largest electronic payments company in the country may have in the partnership a way to recover, after years of falling margins and in profits.

This downward trend was reinforced Tuesday night, when Cielo announced that its third-quarter profit fell 71.5% compared to the same stage of 2019, reflecting a drop in margins due to strong competition and the effects of the crisis triggered by the COVID-19 pandemic.

READ ALSO: Brazilian e-commerce will never be the same after PIX

In a note to customers, Credit Suisse reaffirmed that “it is difficult to see any structurally positive angle in the shares if Cielo continues in the same way”, although it considered the quarterly result above the forecast.

Financial sector analysts still see additional challenges for Cielo with the debut in November of the instant payment system, PIX, which is expected to take over other modalities that provide revenue to financial institutions, such as credit and debit cards, the axis business of acquirers.

Caffarelli, however, claimed in the conference call that the PIX should expand banking services in Brazil, creating greater opportunities for the financial sector, including Cielo itself. But he gave no details.

Nearly noon, Cielo’s stock fell 3.6%, while the Brazilian Ibovespa had a drop of 3.2%, on a day of heavy losses on the stock exchanges worldwide, in the face of a new wave of infections by COVID-19 and fears linked to the US presidential election.

(Translated by LABS)